Luigi Zingales Offers His Advice to Treasury Secretary Geithner

John Hershey

February 4, 2009 @ 4:49pm

While not a direct reponse to Zingales' proposal, I am stumped as to why economists haven't proposed a simply "coupon" stimulous concept, whereby the government would issue expiration dated coupons to consumers that can be used as cash (businesses would simply redeem them at their bank which would in turn be accepted as cash by the government).

This would directly stimulate consumption without government inefficiency costs and timing lags. Moreover, unlike tax rebates, this stimulous couldn't be "saved" and would have to be spent by a certain date or expire worthless.

MS

February 4, 2009 @ 5:48pm

#1 - Sounds like a good idea, but it makes no difference unless the amount of the coupon is very large relative to the usual household expenses. If coupons are used, people would use their coupon and save the money they hold - ie. they would use their coupons to pay for groceries, and use the money previously intended for groceries to pay for debt or to save.

Tim

February 4, 2009 @ 8:19pm

This is an important document. Unfortunately, there are not enough people out there with the intelligence or the guts (or both) to call the "industry experts" on their bailout requests, as Zingales calls out bankers here.

A worthwhile read if only for the thorough explanation of why the "bad bank" makes sense!

Pedro

February 5, 2009 @ 10:21pm

Correct me if I am wrong but didn't Citigroup already start to do this?...........
http://www.nytimes.com/2009/01/14/business/14citi.html?_r=1

XavierL

February 8, 2009 @ 11:11pm

Was the link changed? The one given does not work for me, but http://faculty.chicagobooth.edu/luigi.zingales/research/papers/geithner.pdf does.